BLUEDARTNSEMay 09, 2022

Blue Dart Express Limited

9,362words
128turns
19analyst exchanges
1executives
Management on call
Aneel Gambhir
CHIEF FINANCIAL OFFICER, BLUE DART EXPRESS LIMITED
Key numbers — 40 extracted
20%
perspective, there is a good growth on a lop line, which is in high double digit, which is about 20%-21 % growth on the top line for stand alone, which is coming with a healthy mix of volume and rea
21 %
spective, there is a good growth on a lop line, which is in high double digit, which is about 20%-21 % growth on the top line for stand alone, which is coming with a healthy mix of volume and realizat
25%
on bottom line side: EBITDA performance has been quite good, healthy margin, which is about over 25% growth over last year, same quarter y-o-y with the 226 crore of EBITDA and margin also improved a
226 crore
good, healthy margin, which is about over 25% growth over last year, same quarter y-o-y with the 226 crore of EBITDA and margin also improved at 19.4% versus last year of 18.6%. If you talk about full yea
19.4%
wth over last year, same quarter y-o-y with the 226 crore of EBITDA and margin also improved at 19.4% versus last year of 18.6%. If you talk about full year performance standalone I think, we have fi
18.6%
quarter y-o-y with the 226 crore of EBITDA and margin also improved at 19.4% versus last year of 18.6%. If you talk about full year performance standalone I think, we have first time record that we cr
4000 crore
ou talk about full year performance standalone I think, we have first time record that we crossed 4000 crores, so currently 4409 crore top line growth, which is what 34% growth for previous year and similar
4409 crore
rformance standalone I think, we have first time record that we crossed 4000 crores, so currently 4409 crore top line growth, which is what 34% growth for previous year and similarly on we are being a fixed
34%
t time record that we crossed 4000 crores, so currently 4409 crore top line growth, which is what 34% growth for previous year and similarly on we are being a fixed cost company and having an operati
696 crore
having an operating leverage. So, obviously, we have seen good amount of EBITDA, which is about 696 crore EBITDA, which is 92% growth over previous year, PAT stood at Rs. 376 crore which is again almost
92%
age. So, obviously, we have seen good amount of EBITDA, which is about 696 crore EBITDA, which is 92% growth over previous year, PAT stood at Rs. 376 crore which is again almost four times of previou
Rs. 376 crore
of EBITDA, which is about 696 crore EBITDA, which is 92% growth over previous year, PAT stood at Rs. 376 crore which is again almost four times of previous year which was Rs. 96 crore. So, this year has been
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Guidance — 20 items
Aneel Gambhir
opening
“I welcome you to this call, which is an Investor/Analyst call which is open call for everybody and here we will be talking about quarter and the year performance of the company Blue Dart Express Limited and consol numbers of Blue Dart group.”
Aneel Gambhir
opening
“So, going forward also, we will probably not see impact as much as other countries are seeing.”
Aneel Gambhir
opening
“So, this year has been quite good not only from the perspective of healthy demand in the market, and since, economic indicators have been good so far, and they look positive when going forward.”
Aneel Gambhir
qa
“it is functional for various combinations of shipment which arc carried from light to bulk and when I say bulk is like it could be a one ton 5-ton shipment and if you have since it will be counted as one shipment.”
Pulkit Patni
qa
“What I am trying to understand from here on is that we had some bit of cargo that came 10 us because we were in a unique environment of COVID, right, where courts were closed, and a Jot of lawyers were getting files through Blue Dart and you know, these examples, which going forward now, some bit ofit reverses as we arc looking at pretty much everything being reopened.”
Pulkil Palni
qa
“So, my second question is, is on when do we expect another plane to be added to the fleet?”
Pulkil Putni
qa
“I would suspect there will be more operating leverage play out and help the numbers for Blue Dart, however, I saw some research reports mentioning that these current margins are not sustainable and hence they are building in a margin decline in F24, in spite of revenue increasing in F23 and 24.”
Aditya Shirgaonkar
qa
“So, do you think is belly cargo from commercial aircraft is a real competitive threat going forward?”
Ankita
qa
“So, your outlook on the B2B and B2C industry and growth going forward?”
Aneel Gambhir
qa
“barring the quarter, when we had we have to impact, I think there has been a strong demand basis which we have been growing our top line and going forward also going by the economic indicators be it a forecast from various agencies and also government plans on improving infrastructure.”
Risks & concerns — 15 flagged
Is it okay if I keep my video off so that, you know there is no concern on the audio so I will switch off my video.
— Aneel Gambhir
Though we know that there is a difficult situation be it geopolitical scenario and still this pandemic is not over.
— Aneel Gambhir
Then I'll move on to what we think from future perspective, I think, barring the risk of wav 4, and also maybe the inflationary risk, which we see because of geopolitical situation, crude prices going up, even metal prices going up, that could have some impact on the production on the manufacturing industry.
— Aneel Gambhir
So, it is difficult to pinpoint, but because the jump that I see from 140 to 170 happened in two years.
— Pulkit Patni
I would suspect there will be more operating leverage play out and help the numbers for Blue Dart, however, I saw some research reports mentioning that these current margins are not sustainable and hence they are building in a margin decline in F24, in spite of revenue increasing in F23 and 24.
— Pulkil Putni
There could be short term impact of those capacity built up, but long-term story remains intact.
— Aneel Gnmbhir
So, some reports also talk about how competition will build up especially from the Belly cargo space from commercial airlines, but I thought you had mentioned early earlier in one of the previous con-calls that commercial airline, Belly Cargo and your operations they find it very difficult to compete straightaway because they are more the passenger ferry.
— Aditya Shirgaonkar
So, like, we know that government has been heavily investing in infrastructure, and there is a multiplier impact of that from the private sector.
— Aneel Gambhir
at least 7-8%, then all these efficiency measures coupled with the scalability of infrastructure, and also, the manufacturing sector, which government is doing goose including the PL!, incentives for people to produce in India, all of that holds good promise and that is why we feel that probably going forward demand is going to be strong, barring if there are some temporary impact of inflation or maybe geopolitical situation could derail.
— Aneel Gambhir
And one last from I said, what has been the impact of ATF price increase on !he financials?
— Aneel Gambhir
The fuel has been quite volatile for last quite a few months and we all know that geopolitical situation has been impacting the fuel and handling fuel volatilily is not new to us.
— Aneel Gambhir
So, you mean to say there is no material impact of increase in ATF price on the quaner and for the full year.
— Ankita
First, on the employee costs, I can see that there is a sharp decline sequentially.
— Kripashankar
So, I think, that integration challenge, I'm sure any such event would have that challenge, and what we understand that is often lute scenario, and not as much as in the quarter which you were discussing correctly on the results side because this was more towards in April, also, the reports started appearing.
— Aneel Gamhhir
given that the E-commerce logistics is an extremely competitive space vis-ll-vis, a B2B side, do you see that the mix itself can have an optical challenge on !he margin side.
— Kri pashankar
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Q&A — 19 exchanges
Q
Pulkit, I think let me give you a little more clarity on the realization part, which you just mentioned. So, as far as the realization is concerned, as you know that every year we have been announcing GPI that is to cover inflationary costs and because we know that in India inflation continues to be in 5 to 6% range. So, to offset that impact. we do take a GP! every year which becomes a structured exercise for last 3-4 years, but when you calculate in relation per shipment on a macro level, because of our product portfolio, which are different kinds of offerings are there probably may not give
Pulkit Patni
Fair points. I completely understand. Lee me just rephrase that parts. What I am trying to understand from here on is that we had some bit of cargo that came 10 us because we were in a unique environment of COVID, right, where courts were closed, and a Jot of lawyers were getting files through Blue Dart and you know, these examples, which going forward now, some bit ofit reverses as we arc looking at pretty much everything being reopened. So, I am just trying to understand from that standpoint, did that element have anything to do with your realization number? That's what I am trying to unders
Q
So. e-commerce portion is one of the important vertical for us which has been contributing to the top line. So, though this information not in public domain, but it is one of the key vertical for us to grow right now, we are not providing that information on the how much percentage per se, but on a rough scale basis, one can say roughly about you know, in the range of) would say one fourth or so it contributes that much.
Management
Q
In revenue terms sure.
Management
Q
I would not be able to provide that, because that is not in public domain.
Management
Q
So, I wanted to understand what is your demand outflow for B2B and B2C because in anticipation of strong demand is what is driving the, CAPEX plan and higher capacity addition in the air and ground Express. So, your outlook on the B2B and B2C industry and growth going forward?
Aneel Gambhir
So, very good question Ankita, thank you for it. If you look back on last 5 to 6 quarters. barring the quarter, when we had we have to impact, I think there has been a strong demand basis which we have been growing our top line and going forward also going by the economic indicators be it a forecast from various agencies and also government plans on improving infrastructure. So, like, we know that government has been heavily investing in infrastructure, and there is a multiplier impact of that from the private sector. So, if all of that has to happen, coupled with the PM Gati Shakti Plan, wher
Q
Great margins are.just a couple of questions sir. First, on the employee costs, I can see that there is a sharp decline sequentially. So.just wanted to understand, is there any one offs or any specific reason why it is relatively lower?
Aneel Gambhir
Okay, yes, for the quaner, I think there is a slight, lower employee cost as compared to the previous quaners, previous quaner actually was a festive quancr. That's where we do a lot of time hiring and that is why it impacts the wage bill and this quaner being not a festive quaner. That is why there is some amount of improvement in efficiency. At the same time, there is a small reversal of the previous quaner. That's where because at the month end when you make a provision, and then sometimes you find that probably it was little conservative, and that's where small reversal happens and that's
Q
So. almost I/3th would come from the ground.
Management
Q
Meaning going forward. you are talking about.
Management
Q
So, going forward. it will be very difficult to comment at this point of time. but then, yes, ground is growing faster than air. So. obviously, there will be some skew towards ground as you move ahead. Now. it depends how the situation pans out. Accordingly, I will not be able to give you the numbers as to what mix we are looking at. but definitely there will be a skew towards ground.
Management
Q
So. in groundside. you can comfortably going by the current, indicators a high double digit kind of growth and on air side you can take high single digit kind of a growth.
Management
Q
First of all, congratulations on a great set of numbers to the entire team and a great year also, sir. two queslions. One. I think in one of the responses to the earlier participants, you mentioned that there was a small reversal in the employee cost. I think. even if you were to adjust for that. I think your margins would be 18% plus, I am talking about the EBITDA margins. Would you say that that is the new normal? I mean. that that becomes your base case, in a way.
Aneel Gambhir
So, current quarter if you talk over. Okay, you are saying you're just and after adjusting. you're calculating the margin. Yeah, I mean, even if you even if you add back that whatever Rs. 8- 10 crores to the employee cost, I think still, your margins would be almost close to 18%, or even slightly higher than that. vis-a-vis, maybe 16 and a half or something like that in Q3. What I wanted to know was, is this I 8% odd becomes your new normal, given the cost cutting measures that we have been taking for the last few quarters? So, very good question here, though, 18% looks quite high in given the
Q
Yes, thank you so much for your time. Sir my first question is that did I understand you correctly when you said that there is not going to be much impact on margins from a change in mix if it happens? So, are we saying that road margins and air margins are roughly similar?
Aneel Gambhir
Yes, so what we do is in our pricing strategy, currently margin, we maintained at the same level almost with a very marginal difference. So, if you know ground grows faster, still, it may not impact margin as much is general perception is. You are absolutely right. Sure and sir would it be fair to say that the bulk of the gains from cost rationalization measures are already reflected in the numbers, though, obviously, it is an ongoing exercise but the bulk of it is already realized. Yes, you are absolutely right. We are in the journey of excellence and whatever we are all on the plate, a lot o
Q
I have not seen the revenue number declining.
Snnjny Selhupathi
Compared to your December quarter. December quarter, definitely, because that's the festive quarter, generally you will have a high revenue. So, it's more of a seasonality. So, typically, for us, the highest revenue would be in December quarter. And followed by September quarter, followed by March quarter, and the lowest quarter generally used to be our June quarter and that is how the scenario looks like if you go look in the past. And there is no impact of Omicron wave per se. Per se in last quarter. No. Okay. Okay and sir my other question is that, as you say that December is your biggest q
Q
Sir I just wanted one clarification. So, this we have seen a sequential decline in the depreciation number. So, is this because of the aircraft that we purchased and should we see this as a number going forward to sustain?
Aneel Gambhir
So, now depreciation number has two things and primarily for that responsibility comes from the 116-accounting standard. So, if you sign new leases, suddenly this number goes up and if you have new facilities if you do not add new facilities obviously sequentially, the depreciation number will keep going down. That is point number one and second impact you rightly identified because we purchased three aircrafts. So, earlier those were appearing as a part of ROU asset, which now generaUy will be depreciated over a longer term, earlier that gets depreciated over a period of lease term, now, inst
Q
Just wanted to check with you what would be the share of the documents in this quarter?
Aneel Gamhhir
So, as far as document is concerned, it continues to similar range what we have seen earlier pre pandemic, which is close to about in the range of about 1/4 kind of number. Okay, so we arc back to the pre-pandemic. Okay, and just wanted to understand, like you were saying that the ATA prices are a complete past to where the lack of say a month or so max, 1he realizations for us will move in line with ii, right? So, what is the kind of realization growth that we could see and also if you could throw some kind of light on the volume growth, because our base of volume growth is very strong in FY2
Q
Sir I had a question on the service transport business wherein one of our competitors namely Gati. They have been talking about a 3x growth in their top line in the next three years, wherein the industry is just going to grow at a CAGR of 12 to 15%. They are kind of targeting a 3,c growth, which will mainly come from them taking away a chunk of the market share from the existing competitors. So, just what are your thoughts on this? Do you see this as a threat and how confident arc you about holding on to your market share?
Aneel Gambhh-
So, I am not able to comment on what Gali has made a statement on, because I am sure they will have their strategy, how they want to do it. As far as Blue Dart is concerned, we always welcome competition, because that helps us improving our offering to customers. as I mentioned earlier. that our focus continues to be on customer requirements and making sure that whatever decision we take. we keep customer in mind, and keep meeting the customer requirement, and always have a happy customer. So, if you have a happy customer I am sure, customer is going to continue to deal with you as a service p
Q
Sir. So, right now. markel share study has not been conducted because of a pandemic and now markets are stabilizing. So, people are now talking about conducting a survey. As we know, earlier, we had a market share about 18%. That's a pre pandemic we are calking about, but there is a lot of change in customer buying habits and also, growth has been quite high for us as well, especially on the number of shipments we could pick up or even on the top line side. So, right now. I am not able to comment because credible numbers are not available. Once study is conducted by the market research agency.
Vipul Shah
And directionally, can you comment on the margin in e-commerce segment vis-a-vis other segments? I do not want the exact number just direction. Yes, so as earlier I mentioned that Blue Dart believes in doing business profitably, and we will continue to do that and I am sure competition will follow now, the same strategy, because of the media reports suggest that now they are also in the coming in the same league. So, if they come and compete on a same level playing field, I think Blue Dart would continue to do business profitability and also gain market share because of, better service deliver
Q
Just wanted to get some clarity based on your response to some of the questions. You talked about high double digit volume growth and 4% to 5% pricing growth. which seems lo suggest almost a 20% plus kind of revenue growth and I am not able to tie it up with what you said on the ground and air space, how do you get this kind of revenue growth without air going in double digits, because you mentioned that air will grow only at high single digits, whereas ground is just I/3th of your business. So, for you to achieve an overall 20% plus would mean grounds to add 50% Plus, I mean, so, please help
Aneel Gamhhir
So, firstly, Pulkit I did not say that we will grow to 20% I said, growth maybe double digit and also will have 4% to 5% kind of a relation gain, which you do get in as we have been getting in the past not to two years. Having said that if one goes by indicators, and you know, growth on ground is a high double digit, could be anywhere between 15 to any number one can talk about 20-30 one can look at it that way. That's point number one. Second, yes. from long term perspective it could be high single digit, but short-term perspective, it could be double digit as well. But then that's what we ar
Q
Thank you, pleasure talking to you, interacting with you, and looking forward to having your feedback. If you have any feedback you can always share with us. So, maybe through Alok and otherwise also, most welcome. Thank you.
Management
Speaking time
Aneel Gambhir
43
Moderator
20
Aneel Gnmbhir
7
Aneel Gamhhir
7
Kripashankar
6
Alok Deshpande
5
Namish Rao
5
Pulkit Singal
5
Sandeep Bansal
4
Sanjay Sethupathi
4
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Opening remarks
Aneel Gambhir
Is it okay if I keep my video off so that, you know there is no concern on the audio so I will switch off my video. Good evening to all of you. Hope all of you are doing well. I welcome you to this call, which is an Investor/Analyst call which is open call for everybody and here we will be talking about quarter and the year performance of the company Blue Dart Express Limited and consol numbers of Blue Dart group. So, as you know, I'm sure most of you would have seen the result. Let me start from the top line. From top line perspective, there is a good growth on a lop line, which is in high double digit, which is about 20%-21 % growth on the top line for stand alone, which is coming with a healthy mix of volume and realization improvement. Though we know that there is a difficult situation be it geopolitical scenario and still this pandemic is not over. We are hearing here and there and especially outside India again where covid has been you know making noise especially in our neighbor
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